Media Agency Forecasters Pull No Punches for '09

Smith, Coen and King See Little Hope of Economic Recovery Anytime Soon

NEW YORK (AdAge.com) -- "This downturn is very widespread, runs across major sectors, and the consumer entrenchment is deeper than I've ever known," cautioned Adam Smith, futures director of WPP's Group M media unit.

Adam Smith
That verdict, along with other media-spending prognostications, came during today's opening session of 36th Annual Global Media and Communications Conference, hosted by investment back UBS.

Time for a bath
"So advertising, as you might expect, will take a bath for a couple of quarters in a typical recession and this [recession] feels like it will be [another] four quarters," Mr. Smith continued. Aside from offering up Group M's 2009 advertising spend forecasts, he, along with Robert Coen of Interpublic Group of Cos.' Magna and Steven King of Publicis Group's ZenithOptimedia, also provided some thoughts on when the market might finally hit bottom, the opportunities provided by emerging markets and digital media.

Mr. King doesn't believe the industry downturn has hit bottom yet because he is still seeing "quite" strong declines. The situation has become so fluid and unstable that he said the agency has gone from revising its projection figures on a monthly basis instead of a quarterly basis. "There is more volatility in the market at the moment," he said. "And we are indicating that there will be some gentle signs of reaching some recovery or slowdown by [the third quarter] but not before then."

Mr. Coen said it's hard to determine what exactly the worst-case scenario is because it's unclear just how many companies are actually solvent "and whether they have stuff in those portfolios that are worth nothing, so it could be terrible [but] I don't think it will be."

Still, he advises not to use the advertising industry as a barometer for the situation because advertising has never been a leading indicator: "It follows the economy," he said.

Mr. King said ZenithOptimedia has lowered its forecasts in most of the developing markets to more conservative levels due to some constrained growth, but that it has yet to see any signs of an impending implosion.

Digital seen as slowing
And while the internet was a bright spot in each of their forecasts, Mr. Coen doesn't believe it to be much different from other types of advertising, as some online ad trends are starting to slow down "considerably."

"[Internet advertising] is in an evolution that's going to make them look like all other media," Mr. Coen said. "With a couple of extra advantages, it will allow them to hold a lead for a while but not the magnitude they have seen in the past."

Search, classifieds, display and social community websites is where ZenithOptimedia's Mr. King is seeing the majority of growth take place in internet advertising.

Search is the new direct
Mr. Smith added that search marketing has become the new direct marketing. And despite the measurability of search, Mr. Smith said there are some assumptions marketers and agencies need to stop and consider.

"Yes, you can count a lot of stuff, but we may have been counting the wrong stuff or too much of it," he said. "And we are really interrogating that now. Do we really need to buy so much of this stuff? Do we really need to reward a site for putting somebody on a purchase path 30 days ago? The answer to these questions is often, no we don't. In short, I don't think we have a demand problem with digital, I just think that we are getting better at buying it."